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Healthcare Reform Is Set, But Debate Continues

On January 8th at the National Health Working Conference, Gao Qiang, director of China's Ministry of Health, announced that his agency will establish four areas of healthcare service while also outlining the direction and form of future healthcare reforms.

Gao Qiang specified that the reforms will cover rural health coverage, the nation's basic pharmaceutical system, multiple layers of medical insurance, and scientific standards implemented at hospitals.

But although the policy direction has already largely solidified, debate over these issues is still continuing in academic circles.

On January 10, the Ministry of Health held a press conference where press secretary Mao Qunan clarified that the direction of the reform program has been decided. But Mao also warned that the reforms should not be misunderstood-- they will not be completed in just one year and that they are not just the undertaking of the Ministry of Health.

Gao Qiang describes basic healthcare as something that the government provides to citizens free of charge. The pharmaceutical system involves supervision over the production, purchasing, distribution, and use of pharmaceuticals. The multi-layered health insurance system will create different kinds of insurance as it is applicable to people of different economic backgrounds.

'This draws from the English healthcare system,' says one industry insider. It is also similar to a report released by the State Council's Development Research Center (SCDRC) evaluating China's healthcare system.

Government leadership has become a theme of the reforms. But some scholars believe that to not have consensus from academia when considering reform on a scale as large as this one is rash and dangerous.

Spokesperson and deputy director of the Ministry of Health Mao Qunan says that reform coordinators have mobilized staff to various provinces to conduct research and surveys on various topics. 'We hope that the reform framework will be based on ample research but will also be released to the public quickly,' he said.

Government officials believe it is in the public's interest to strengthen the controls over drug and treatment prices. But the industry believes that increasing prices are not an inevitable product of the liberalization of the pharmaceutical industry. They are questioning the design of the control system, and stress that it is in the public interest for hospitals to operate in a fair competitive environment.

But both groups share certain stances: among other things they hope that the government will increase investment in healthcare, first guaranteeing basic coverage for everyone.

Both sides main point of contention lies in whether or not the government can bear the burden of universal healthcare costs, whether or not market disruptions can be controlled, and whether universal healthcare is even possible. Simply put; can the government put up the investment, and if it does, can fair coverage be granted?

After the measures were passed, Liu Guoen told this reporter that if China really adopts the British model it will be bad for Chinese citizens.

He says that optimum healthcare reform would require the government to bear the financial burden while leaving management of healthcare services open to market competition. The government can also use basic health insurance to stress the care for disadvantaged who otherwise couldn't afford it. These people would be able to purchase medical treatment in a competitive market, making the money that they spend more effective. Here, the government's main role is to set the rules of the game and establish a fair, competitive market. By letting the medical service institutions operate competitively, prices for their products will go down.

Regarding what people refer to as the failure of opening up the healthcare market, Liu believes the government hasn't set up good rules. And on top of limited investments, resources have been focused in the larger hospitals. These hospitals have monopolized prices and become 'rent seeking' spaces, not environments of genuine competition. With 'rent seeking' behavior ocurring, ordinary citizens will not be able to get fairly priced, high-quality service. At the same time, the government's medical institutions will decrease public health personnel, and be unable to gaurantee the effectiveness of service.

Li Ling says that in the healtchare industry, information is asymmetrical to a large degree-- patients do not consider the costs of the medical products they use and irriationally choose the most expensive ones.

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